Energy Stocks Beat Down By Trade Algo Are Gaining Steam

It was a monster year for the energy sector in 2022, when stock prices of two energy explorers outperformed those of the broader market, but both companies have slumped this year, even though insiders have recently bought up shares at both companies.

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ConocoPhillips COP -0.17% (ticker: COP) and Devon Energy DVN 0.00% (ticker: DVN) shares surged 63% and 40%, respectively, in 2022, outperforming the S&P 500 indexSPX -1.05% , which fell 19% in the same year. There has been a 58% jump in the price of the Energy Select Sector SPDRXLE –0.13% exchange-traded fund (XLE) in 2022, which includes both ConocoPhillips and Devon as components.

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There has been a difference this year, however, since oil prices have slipped in the face of persistent inflation, and gas prices have fallen due to the fact that the winter was warmer than expected. With a modest gain of 3.4%, the S&P 500 is now on top with a modest gain of 3.6%. Shares of ConocoPhillips and Devon Energy are both down 11%, while the energy ETF has fallen by 3.2%.

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While both of the companies have their stock performances tied to commodity prices, they are quite different from each other apart from that. ConocoPhillips is a much bigger energy exploration company than Devon Energy; the former has a market value of $128 billion, while the latter weighs in at only $35 billion. ConocoPhillips is a global energy company, while Devon Energy concentrates on the Delaware Basin, which is located in West Texas and New Mexico and is a part of the Permian Basin.

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During the company's fourth-quarter earnings call on Feb. 2, Credit Suisse analyst William Janela noted that cash flow per share exceeded consensus estimates, while earnings per share were in line with consensus expectations. According to Janela, ConocoPhillips' guidance is "choppy." His target price has been lowered to $140 from $145, but he has kept his Outperform rating on the stock, which has not moved much since the report was released.

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ConocoPhillips director R.A. Walker bought 6,000 shares on Feb. 17 for $627,000 and followed up on Feb. 22 with another $618,000 for 6,000 shares, or $103 each. The Securities and Exchange Commission has recorded that Walker has purchased 9,600 shares through a personal account and 2,400 shares through a limited liability partnership that he controls, according to the forms he filed with them. It is estimated that Walker owns 27,600 shares of ConocoPhillips in his personal account as well as 6,900 shares through his limited liability partnership.

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ConocoPhillips did not respond to Walker's request for comment. The company also said it does not comment on individual investment decisions made by its executives and directors. Occidental Petroleum (OXY) acquired Anadarko Petroleum in 2019, where Walker served as chairman and CEO. On the open market, Walker last purchased ConocoPhillips shares in August 2021 for $1.25 million, a price of $55.50 per share, which is an average price for 22,500 shares.

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As a result of Devon's fourth-quarter earnings announcement after the market closed on Valentine's Day, the company broke investors' hearts. Over the next few days, the shares of the company plummeted. John Freeman, an analyst at Raymond James, decreased his target price on Devon stock from $80 to $67, but he maintained a Strong Buy recommendation on the stock.

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On Feb. 17, Devon's President and CEO Richard E. Muncrief paid $532,800 for 10,000 shares, with an average price of $53.28 per share, followed by a $265,000 payment on Feb. 22 for 5,000 more shares, with an average price of $53 per share. The number of Devon shares he owns has increased to 1,978,977. There was a payment of $250,000 made to Devon director John E. Bethancourt on the same day for a total of 4,706 shares, with an average price of $53.05 per share. In total, Bethancourt owns 94,669 shares through a personal account, and 941 shares through a trust account.

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Despite Devon requesting that Muncrief and Bethancourt be made available for comment, they did not respond. Since Devon Energy merged with WPX Energy in January 2021, Muncrief has been serving as President and CEO, having previously been Chairman and CEO of WPX Energy. It is the first time he has purchased Devon stock on the open market.

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Devon's director Bethancourt, who has served on the board since January 2014, was formerly an executive with Chevron (CVX). A total of 12,000 shares were purchased by him on the open market in June 2018, at an average price of $41.90 per share, when he paid $500,000 for 12,000 shares.